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Pump prices rise 2 cents as supplies tighten

/ Source: The Associated Press

Gas pump prices across the country rose to within a dime of $4 a gallon Friday, as weather-related refinery outages tightened supplies and pushed prices up.

The national average increased 2 cents to nearly $3.91 a gallon for regular gasoline. It's the highest level since July 31, 2008, when pump prices were falling from a record $4.11 a gallon on July 17 of that year.

Drivers in nine states and the District of Columbia already pay $4 a gallon or more for gas. At the current rate of increase, the national average could reach $4 by May 8, Analysts expect it to start falling later in the month, as refineries return to full production and more gas becomes available.

A series of severe storms caused power outages that temporarily shut down seven refineries in Texas, Alabama and Pennsylvania this week. The shutdowns aren't expected to last more than a few days, but 750,000 to 1 million barrels a day of production a day has been halted intermittently, according to Tom Kloza, publisher and chief oil analyst at Oil Price Information Service.

The affected refineries mostly ship product to the Southeast, Midwest and Gulf Coast states, Kloza said. That's where motorists will probably see the biggest increases in pump prices over the next few days.

The Commerce Department said Friday that personal incomes rose 0.5 percent and consumer spending rose 0.6 percent in March, but higher gas prices are taking a toll on consumers' wallets.

"The increase in ... spending was swallowed up by higher gasoline and food prices," said IHS Global Insight economist Chris Christopher. "This report is good news since it shows that consumers are plowing ahead despite rising gasoline and food prices. The bad news is that consumer spending adjusted for inflation has lost the momentum it had in the last quarter of 2010," he said.

Some economists think lower gas prices could encourage consumer spending in other areas, but the high unemployment rate will keep the economic recovery in low gear.

Both oil and gasoline futures have risen around 35 percent since mid-February when uprisings broke out in Libya and other countries in the Middle East and North Africa. Traders have been concerned that the anti-government clashes will disrupt oil supplies, although that hasn't happened yet.

Prices for oil and other energy futures got a boost from a weaker dollar on Friday. The dollar his a three-year low against six major currencies. Since commodities are priced in dollars, they become more of a bargain for traders using other currencies.

Benchmark crude for June delivery rose 56 cents to $113.42 a barrel in midday trading on the New York Mercantile Exchange.

Heating oil rose 1.36 cents to $3.2595 per gallon, gasoline futures gained a penny at $3.3809 per gallon and natural gas rose 6 cents to $4.689 on the Nymex.

In London, Brent crude rose 62 cents to $125.64 on the ICE Futures exchange.